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Clicks produced another strong trading performance, led by pharmacy and front shop health sales. Customers continued to respond positively to the Clicks value promotions and differentiated product ranges as the chain reported strong volume growth while gaining market share in all product categories.
| Health and beauty sales* |
% increase |
% contribution to sales |
|---|---|---|
| Pharmacy | 25.7 | 29.9 |
| Front shop health | 13.7 | 22.9 |
| Beauty and personal care | 9.5 | 31.6 |
| General merchandise | 8.4 | 15.6 |
| Total turnover | 14.7 | 100.0 |
| * Includes Clicks, The Body Shop, GNC and Claire’s | ||
Pharmacy sales grew by 25.7% and contributed to Clicks increasing its retail pharmacy market share from 19.7% to 22.2%. The pharmacy category benefited from the opening of 73 pharmacies, including 37 as part of the outsourcing agreement with the Netcare Group.
Generic medicines continued to grow faster as more patients are being switched to these lower-priced alternatives, with sales increasing by 30.4% and accounting for 49.8% (2016: 47.7%) of pharmacy sales in Clicks.
Over-the-counter medicines, which do not require a prescription, continued to grow stongly, confirming the trend to self-medication where customers take responsibility for their own health and wellness.
Front shop sales continue to be driven by promotional sales which increased by 24.1% and accounted for 34.7% of sales in Clicks.
Front shop health grew sales by 13.7%, with GNC lifting sales by 21.9% and baby 19.2%. Baby merchandise is strategically important in attracting new customers and continues to be the fastest-growing front shop category in Clicks. Market share in the baby category increased from 12.2% to 13.9%.
Beauty and personal care sales grew by 9.5% with good performances from the Claire’s brand, fragrances and toiletries. Growth in haircare was slower owing to a lack of product innovation although Clicks continued to grow its share of the market from 25.7% to 27.2%.
General merchandise, which has the most discretionary product offering, grew sales by 8.4%, led by the convenience categories which grew by over 20%. Clicks maintained its leading position in small electrical appliances with a market share of 20.0%.
| Market share (%) | 2017 | 2016 |
|---|---|---|
| Health | ||
| Retail pharmacy* | 22.2 | 19.7 |
| Front shop health** | 29.7 | 29.0 |
| Baby** | 13.9 | 12.2 |
| Beauty and personal care | ||
| Skincare** | 28.3 | 27.3 |
| Haircare** | 27.2 | 25.7 |
| General merchandise | ||
| Small household appliances*** | 20.0 | 19.2 |
| * | Quintiles IMS (Private retail pharmacy S1- 6) |
| ** | AC Nielsen (comparative restated) |
| *** | GfK (comparative restated) |
Clicks passed the 600-store mark as 111 net new stores were opened, increasing the brand’s footprint to 622 stores at year-end. The growth in the store footprint was accelerated through the implementation of a long-term outsourcing arrangement with the Netcare Group whereby Clicks has opened stores in 43 Netcare hospitals and taken over the management of the pharmacies in 37 Medicross medical and dental centres.
The Clicks footprint includes 28 stores in neighbouring Namibia (19 stores), Swaziland (four stores), Botswana (four stores) and Lesotho (one store).
During the year 55 stores across the chain were extended or refurbished to ensure the stores remain modern and appealing to customers.
Clicks is the largest retail pharmacy chain in the country and extended its network to 473 with the opening of 73 in-store pharmacies. Clicks was ranked first in the pharmacy category in the annual Ask Afrika Orange Index service excellence survey.
Customers have responded positively to the Clicks online offer which was launched late in the last financial year, offering the product range available in large Clicks stores. The online platform complements the store experience and increases customer convenience, with a “click and collect” delivery facility in most Clicks stores in South Africa. The online store has shown good growth and in the short term is expected to generate sales equivalent to a small Clicks store.
ClubCard is a strategic growth driver which builds loyalty to the brand, increases the frequency of shopping and enables Clicks to engage digitally with its customers.
Active membership reached the 7 million mark during the year. ClubCard members accounted for 77.4% of sales in Clicks and R322 million was returned to customers in cashback vouchers.
Clicks extended its digital offering with the launch of the Clicks mobile app which includes a virtual ClubCard, eliminating the need for customers to use the traditional plastic card. The app also allows customers to submit scripts and order repeat medication.
ClubCard benefits were further extended through an affinity partnership with Shell South Africa which allows members to earn ClubCard points when filling up at Shell fuel stations nationwide.
Private label and exclusive brands increase the appeal of the Clicks brand, offer differentiated ranges at competitive prices and are also margin enhancing. Sales of private label products accounted for 21.8% of total sales in Clicks, with front shop sales at 28.5% and pharmacy at 6.1%.
The best-selling ranges of the group’s exclusive health and beauty franchise brands, The Body Shop, GNC and Claire’s, further differentiate the Clicks offer. The Body Shop has a presence in 122 Clicks stores, GNC in 375 stores and Claire’s in 142 Clicks stores. Clicks is also the exclusive retail stockist of the Sorbet product range.
A key element of improving the in-store experience for customers is the service levels from knowledgeable and friendly staff. The group is committed to investing in its people, evidenced by the R106 million investment in training and development in the past year.
As the largest employer of pharmacy staff in the private sector with over 2 700 pharmacy and clinic professionals, Clicks is actively building capacity through the Pharmacy Healthcare Academy and providing financial support to address the critical shortage of pharmacists.
Clicks awarded 100 bursaries to pharmacy students in 2017 and has invested over R22 million in bursaries in the past five years. During the year 339 pharmacy assistants were enrolled and 64 pharmacy internships awarded.
The store operations learnership programme attracted 100 trainee managers in 2017 while 20 graduates were enrolled on the retail graduate development programme.
Clicks has a long-term goal to expand its store footprint to 900 in South Africa. In the year ahead Clicks plans to open 25 to 30 new stores and 30 to 35 new pharmacies. A further 55 stores will be refurbished.
The Clicks distribution centre in Centurion, Gauteng, is being expanded by 20 000 m² to support the increasing scale of the Clicks chain. The project will be undertaken at a cost of R230 million and is expected to be completed during the first quarter of financial year 2019.
Private label, together with exclusive and franchise brands, is planned to contribute 29% of front shop sales in the new year. The presence of The Body Shop, GNC and Claire’s will be expanded to additional Clicks stores in the year ahead.
ClubCard membership is targeted to grow to 7.5 million while we plan to enrol at least 100 000 customers to the new virtual ClubCard.
Vikesh Ramsunder
Chief operating officer
| Plans and targets for 2017 | Achieved in 2017 | Plans and targets for 2018 |
|---|---|---|
| Deliver a competitive and differentiated product offer | ||
| Increase front shop private label and exclusive brand sales to 28.0% | Front shop private label and exclusive sales 28.5% (2016: 28.2%) of total sales | Increase front shop private label and exclusive brand sales to 29% |
Expand presence of franchise brands in Clicks
|
Franchise brands in Clicks stores
|
Expand presence of franchise brands in Clicks
|
| Create a great customer experience in-store | ||
| Expand private label scheduled generic medicines range by 32 products | 100 private label medicines (2016: 100) | Expand private label scheduled generic medicines range |
| Grow repeat prescription service to 50% of repeat scripts | 43% of scripts now on repeat prescription service | Increase repeat prescription service to 50% of repeat scripts |
| Expand clinic services and open 10 new clinics | 195 clinics at year-end | 200 clinics |
| Grow the retail footprint | ||
| Open 20 to 25 new Clicks stores |
Net 111 stores opened (2016: 25) 622 stores at year-end (2016: 511) |
Open 25 to 30 new Clicks stores |
| 60 stores to be expanded/refurbished | 55 stores expanded/refurbished (2016: 45) | 55 stores to be expanded/refurbished |
| Open 30 to 35 new pharmacies |
Net 73 pharmacies opened (2016: 39) 473 pharmacies at year-end (2016: 400) Launched in-store collection service |
Open 30 to 35 new pharmacies |
| Drive customer loyalty through ClubCard | ||
| Increase membership to 6.5 million | 7.0 million members (2016: 6.2 million) | Increase membership to 7.5 million |
| Grow Baby Club to 400 000 members | 417 000 Baby Club members | Grow Baby Club to 520 000 |
| Grow Seniors Club to 800 000 members |
839 000 Seniors Club members Launched Clicks mobile app Launched virtual ClubCard Launched affinity partnership with Shell |
Grow Seniors Club to 900 000 Enhance digital engagement Enrol 100 000 customers to virtual ClubCard |
| Ensure supply chain excellence | ||
| A new strategic objective not included in 2016 | n/a | Complete Centurion distribution centre expansion |
| Motivated and effectively skilled staff | ||
| 300 pharmacy assistants to be enrolled | 339 pharmacy assistants enrolled | 300 pharmacy assistants to be enrolled |
| 100 pharmacy bursary students | 100 pharmacy bursary students | 100 pharmacy bursary students |
| 90 internships |
64 pharmacy internships 20 graduates enrolled on graduate development programme |
70 internships 20 graduates to be enrolled on graduate development programme |
Chief operating officer
Joined the group in 1993
Previously managing director of UPD and prior to that was head of logistics at Clicks
Extensive retail, distribution and logistics experience
Head of supply chain
Joined the group in 2010
Formerly group head of IT and before that worked for the Ikano Group in Europe
Over 15 years’ international retail and FMCG experience in large supply chain and IT organisations
Head of finance
Joined the group in 2006
Previously head of group finance and head of internal audit
Prior to this held various financial positions with Alliance Boots in the UK
Head of healthcare
Joined the group in 2011
Previously commercial head at UPD
Pharmaceutical manufacturing, hospitals, pharmacy and commercial healthcare experience
Head of stores
Joined the group in 2015
Previously chief sales and operations officer at Nashua
Extensive experience in retail operations, supply chain, brand development and management consulting
Human resources executive
Joined the group in 2015
Previously HR director at Chevron SA
Experience in human resources management, employee relations, organisation development, transformation and talent management
Head of merchandise and marketing
Joined the group in 2012
Previously commercial executive for Clicks Front Shop (excluding health)
Prior to joining the group he was commercial director of L’Oréal Paris for the UK and Ireland
Group head of information technology
Joined the group in 2016
Previously IT director at Massbuild, a division of Massmart
Experienced in IT systems implementations and management in retail and FMCG